Quebec's auditor general is warning that the Université du Québecà Montréal— one of the province's largest universities— is teetering on the edge of bankruptcy, and blames a pair of poorly planned building developments for the institution's debt.
In his audit report released Thursday, Renaud Lachance revealed the extent of UQAM's financial trouble, which has left the institution in such dire straits that is has to borrow money to payinterest on its debt, jeopardizing its mandate to teach and research.
If the francophone university doesn't clean up its books, it risks runninga debt of half a billion dollars by 2012, Lachance said.
The auditor general blames the school's poor finances on a pairof construction projects, the Pierre Dansereau science pavilion and the Îlot Voyageur complex.
The Pierre Dansereau buildingwas built at the cost of $205 million, $106 million over budget, while theÎlot project, which is supposed to house teaching facilities, a parking lot and commercial space, is only half-built and already over budget.
The university also racked up a $223 million line of credit in the last four years whilepaying off the project's interest, Lachance reported.
When added to its long-term debt, which now stands at $346.3 million, UQAM faces a half-billion dollar deficit within five years, he said.
UQAM needs "a significant reduction of its debt, if it wishes to maintain its activities of teaching and research,"Lachancesaid at a Quebec City press conference Thursday.
The Quebec government has already agreed to bail out the university for $200 million, but UQAM's experience will spur theprovince to change rules for university construction projects, said Education Minister Michelle Courchesne.
The government is to consider forcing universities to get permission from the province before launching any new construction projects.
"Even though they don't need public money to build the buildings that they want to build, they will require governmental approval to do so, which they didn't have to get before they started the projectÎlot Voyageur," she said.
The new rules would prevent future situations in which tax dollars are used to keep universities solvent because of overblown expansion projects that were never properly reviewed, Courchesne said.
The university will also have to cut expenses to pay down the debt, she said.
Bidding process for constructionquestioned
The Liberal government came under fire Thursday from the Opposition, which questioned the university's bidding process.
UQAM didn't put out a call for public tenders when it launched theÎlot Voyageur project, but awarded the contract to Busac Real Estate, a subsidiary of a New York-based realty company.
Action Démocratique du Québec legislature member Éric Caire accused the Liberal government of bending to Busac's demands.
"Six of the [Busac] administrators were huge donors to the Liberal party and are profiting from this," Caire said in the national assembly.
The Globe and Mail reported Friday that Busac Real Estate president Michel Couillard and other company employees have contributedfinancially to the Quebec Liberal party.
The Liberal government ordered the auditor general'sreview last spring following reports that suggested the university's finances were in shambles.
UQAM has agreed to draw up a financial road map to pull the institution out of the red. That plan will be ready by Nov. 30, university officials said.
Lachance will release a second audit report in the spring which will detail spending on the Îlot Voyageur project.